Americans relying on Chinese-made drugs

BEIJING  The medicine cabinet in the average U.S. home is filling with drugs made in China, and some experts say that could be a prescription for trouble.

China's booming pharmaceutical industry has doubled exports to the United States in the past five years, undercutting competitors and making American consumers reliant on the safety of Chinese factories and captive to any disruptions in Sino-U.S. commerce.

It might seem like merely a trade issue. But industry experts in Europe and the United States say national-security concerns are edging into the debate.

Consider this scenario:

If a major anthrax attack were to occur in the United States  larger than the one in 2001, when five people died  pharmaceutical companies that make the two antibiotics most suitable for treatment, Cipro and doxycycline, would have no choice but to rely on China or India for key ingredients once American stockpiles were exhausted. Those ingredients no longer are made in the West.

A Portuguese company that ramped up doxycycline production in 2001 at Washington's request said China now controlled the flow of its crucial drug component.

"If we were asked to do this again, we would be dependent on China providing us with key starting materials that are unavailable in the rest of the world," said Guy Villax, the chief executive of Hovione, a Lisbon-based fine chemicals company.

The spectacular growth of China's pharmaceutical industry coincides with some equally huge problems. A kickback scandal ensnared China's State Food and Drug Administration and its chief in charges that they gave approval for bogus drugs, including a counterfeit antibiotic that left 13 people dead. Wary of rising public anger, the state issued a Draconian sanction: It executed the agency chief in July.

Cases of tainted toothpaste, toys and pet food that have made global consumers wary of the "Made in China" label added urgency to a high-profile drug agency purge.

Even so, China's $65 billion pharmaceutical industry is galloping at an annual growth rate of 24 percent in the first eight months of this year. Competitors say China's drug companies not only have low-cost advantages but also get a nearly free pass from U.S. drug regulators, who hold the screws to American companies  raising their costs significantly  but rarely inspect in China.

China says it's a reliable source of safe medicine for its own citizens and export markets. At a news conference last week, the deputy drug agency chief, Wu Zhen, called on countries to work together to ensure a safe global supply chain of medicines.

"To solve the drug safety problems, we need international cooperation," Wu said. "We hope to have ... more cooperation and less finger-pointing."

China dominates more than just antibiotics. U.S. regulators license 714 plants in China to produce ingredients for over-the-counter, generic and prescription drugs for Americans. China has snagged a major share of the global sales of many vitamins, antibiotics, enzymes and painkillers. It makes a third of the world's acetaminophen, an over-the-counter pain medication. Acetaminophen is sold under many brand names, the best known of which is Tylenol, though Tylenol itself isn't made in China.

This brings up another possible scenario:

"Just suppose you are taking some cholesterol drug, and its intermediates or active ingredients are made in China. Then there's some conflict with Taiwan. Will your drug still be available?" asked Joe Acker, the president of the Synthetic Organic Chemical Manufacturers' Association, a trade group in Washington. "The whole drug supply could be in jeopardy in these kinds of situations."

Acker noted that he thinks that the United States could rebound from disruptions in the increasingly globalized supply chain for drug components, in which materials are bought from a number of low-cost countries.

"I'm not a Chicken Little type of person," Acker said. "However, if there were to be a major problem, and we could not source material from China, we would have to gear up production very quickly."

The anthrax scare jolted the United States just a week after the terrorist attacks of Sept. 11, 2001. Letters containing anthrax spores were mailed to news organizations in Florida and New York and to the offices of two U.S. senators. Authorities don't know the source of the letters, and no arrests have been made.

Because of the attacks, the Health and Human Services Department increased stockpiles of antibiotics and vaccines against anthrax.

"We have enough antibiotics ... to treat 40 million Americans," Bill Hall, a spokesman for the department, said in an e-mail, adding that the government also has 28.75 million doses of anthrax vaccine.

Bayer, the German health-care giant, held patent protection until 2004 over the antibiotic known as ciprofloxacin, which it marketed as Cipro. That antibiotic now is mass-produced by generic firms, which get a key ingredient, dichloro fluorobenzene, from one of four Chinese companies or two Indian firms.

The Chinese and Indian companies are all but exempt from oversight by the U.S. Food and Drug Administration.

"Only 13 inspections were conducted in China in 2007," Rep. John Dingell, a Michigan Democrat who chairs the House Committee on Energy and Commerce, said at a hearing Nov. 1. "At this rate, it would take the FDA 55 years just to clear this backlog."

By giving China a virtual pass on FDA inspections, Acker said, Chinese firms get a cost savings of about 25 percent above American companies, which face unannounced on-site inspections at any time.

Since European pharmaceutical companies also face tougher standards, they too have stopped producing some basic drug ingredients, ceding production to Chinese and Indian companies that face less scrutiny and have lower costs.

On both sides of the Atlantic, manufacturers say they fret over the national-security implications of the massive off-shoring of production to Asia.

"If there is a peak in demand triggered by a pandemic or a terrorist event, there will be little domestic production capacity to meet public health needs," said an August 2006 white paper by the U.S. chemicals trade group in conjunction with the European Fine Chemicals Group, its counterpart.

Chinese chemical companies that sell ingredients used by foreign pharmaceutical firms also shield themselves from the news media.

Sun Dongliang, the deputy chief of the chemical industry chamber under the powerful China Council for the Promotion of International Trade, refused a request for an interview.

"He thinks that your interview has nothing to do with the chemical industry. It's about pharmaceutical things," said an assistant who gave only her surname as Guo.

All four Chinese companies that manufacture the key ingredient for ciprofloxacin declined requests for interviews.

China offered foreign journalists a tour of two model pharmaceutical plants in Hangzhou on Nov. 23. The plants were spotless. Workers in face masks toiled in jumpsuits on assembly lines. Polished machinery gleamed. One factory made Chinese medicines to treat prostate ailments. The other made herbal remedies.

Outsiders say Chinese drug plants run the gamut from First to Third World.

"You will see some companies where you can eat off the floor. They are state of the art," said Acker, the U.S. trade group chief. "I hear other stories of places where people are making chemicals while wearing flip-flops."

Despite multiple requests over a two-week period, McClatchy was unable to gain access to any drug ingredient-manufacturing facilities other than the model firms presented by the Chinese government.

Although Chinese authorities warn against foreign finger-pointing, the government's own reaction to the scandal over bogus and substandard drugs earlier this year was extremely harsh.

After drug chief Zheng Xiaoyu's execution, the state began a vast housecleaning. Last week, it said it had shut down 300 drug and medical-device makers, convicted 279 people of irregularities and prompted drug companies to withdraw 7,300 applications for drug approval, indicating more rigor in the approval process.

Such actions left doubt whether consumers ought to be reassured by the factories shut down or alarmed at the state of the industry. Wu, the deputy drug chief, said he hoped to restore faith in Chinese drugs after the kickback scandal.

"The corruption case ... has tarnished our image," he said. "One of the targets of this campaign is to clean up the legacy caused by this corruption case."

Still unclear is whether increased self-policing is sufficient given the magnitude of China's production and its rising share of global medicine chests.

Villax, the Portuguese executive who's a board member of the European Fine Chemicals Group, said some Chinese pharmaceutical manufacturers were cutting corners and that unless enforcement tightened "people will die."

"It's not low-cost labor that concerns us," Villax said. "What we're saying is there are a lot of people not playing by the rules, and not getting caught."

A sign of the troubles that can occur in the pharmaceutical industry came at a plant that was manufacturing a key ingredient used in ciprofloxacin.

A deafening blast ripped through the Fuyuan Chemical Co. plant in Jiangsu province on July 28, 2006. Once the smoke cleared, 22 people lay dead and another 29 were injured. China's State Administration of Work Safety later issued a report charging the plant with ignoring safety rules, adopting low construction standards and operating without permits.